Question 11.54

11.54 Auto dealer loans.

The previous two exercises describe auto loans made directly by a bank. The researchers also looked at 5664 loans made indirectly—that is, through an auto dealer. They again used multiple regression to predict the interest rate using the same set of 13 explanatory variables.

  1. The statistic reported is 27.97. State the null and alternative hypotheses for this statistic. Give the degrees of freedom and the -value for this test. What do you conclude?
  2. The value of is 0.141. What percent of the variation in interest rates is explained by the 13 explanatory variables? Compare this value with the percent explained for direct loans in Exercise 11.53.